'Fast Money': Market Shrugs Off Bad News

The Dow Jones Industrial Average surged past 8,000 Friday as it shook off another woeful jobless report.

The Dow rose 39.51, or 0.50%, to 8,017.59, while the S&P 500 rose 7.88, or 0.94%, to 842.26. The Nasdaq added 19.24, or 1.20%, to 1,621.87.

Melissa Lee, the moderator of CNBC's "Fast Money" TV show, put some historical perspective on the rally, saying it's the best four-week winning streak since July 1938. She asked the panel to comment on the forces behind the upswing.

Tim Seymour said the "guys are afraid to be short" during this run.

Karen Finerman said the fear really "is not to go long." She said people don't want to left on the sidelines with the market setting its sight on breaking even for the year. "I'm actually a little afraid to jump in here because the run has been so dramatic. I wouldn't be surprised to see a sell-off."

Joe Terranova sensed some investor panic from those who started to chase the stocks up to 840 after making the mistake of thinking it was heading to 740.

Finerman said she doesn't know what's really going on with the volatility index, which remains high. She wondered whether it might be due to the debt market being in some disarray or a disbelief in the rally. "I think it's an indicator that there is potentially fear out there," she said.

Seymour said the VIX, which fell to 39.70 today, might be trending down after breaking through its 200-day moving average.

Lee noted that commodities and materials markets were higher this week because of the reflation trade, with the iShares Dow Jones Transportation Average ( IYT) up 8% for the week and 30% for the past three weeks.

Seymour said the jump is significant because the IYT is a leading indicator of the economy.

Terranova said people are getting hurt in the gold trade as both gold and dollar fell again today. He said copper and oil is the best way to play this pace.

Macke said these stocks are playing catch up after having underperformed earlier. He also noted people are using credit cards for transactions to a degree but that should slow as the jobless situation worsens.

Lee brought in Jon Najarian to talk about some strong takeover chatter in the options markets. Najarian mentioned three potential takeover targets.

The biggest rumor concerns Halliburton ( HAL), which has fallen to $17 a share. The rumored buyer is Exxon Mobil ( XOM).

The second rumor has Novartis ( NOV) looking at Cubist Pharmaceuticals ( CBT) for its antibiotic drug.

There is also chatter about Nucor ( NUE) being interested in Cliff Natural Resources ( CLF).

Finerman said a Halliburton would be a very big deal, but she didn't know whether Exxon wants to expand in the services space.

Lee brought in Chris Mustacio, managing director at Stifel Nicolas, to comment on a news report that TARP banks would be working with other banks to buy each other's toxic assets.

Mustacio said the idea behind such a scheme would be to bid up the assets to limit the losses for the banks. He said the scheme, if it were to be pulled off, would be the biggest Ponzi scheme ever.

He said the biggest problem for the banks is their loan portfolios and the large gap in the bid-ask spread. He said it's going to present a problem to the sellers because they would have to sell at low levels to clear.

The panel briefly commented on a breaking news story from the Wall Street Journal that said that White House economic adviser Larry Summers had received $5.2 million for his work with the D.E. Shaw hedge fund last year as well as speaking fees from several financial instutions including TARP-funded Citigroup ( C).

Finerman didn't see much of a problem in the report because Summers didn't make money in the public sector.

Lee shifted the topic to the emerging markets, which is up 9% year to date and shows signs of being overheated. Seymour said investors have to be careful in this space because it's become a crowded trade with a handful of names.

In the final trades, Macke said to sell Goldman Sachs ( GS). Seymour liked China Mobile. Finerman was for ProShares UltraShort 20+ year Treasury ETF ( TBT), and Terranova said to take profits in Research In Motion ( RIMM).